Kiwibank interim profit down 12% from last year's record high, lending and deposit growth outstrips overall market growth

Kiwibank says its half-year profit fell 12% as its net interest margin dropped and its costs and loan impairment charge both rose.

The bank's net profit after tax for the six months to December 31, 2024 dropped $13 million, or 12%, to $92 million from its record high $105 million in the equivalent period of its previous financial year.

Kiwibank said operating income rose 3% to $461 million, and operating expenses climbed 9% to $311 million.

The bank's net interest margin, the difference between what it borrows money at through the likes of deposits and what it lends it out at, dropped 18 basis points to 2.29%, and its cost to income ratio rose 362 basis points to 67.5%. Loan impairment charges rose 29% to $21 million.

Over the six months from June to December 2024 Kiwibank says net lending grew $2 billion, lifting its lending book 6% to $34.4 billion. It says home lending grew 2.1 times faster than the overall market and business lending increased more than six times faster than the market. Non-housing term lending rose $598 million, or 13%, to $5.14 billion in the six months to December.

As of December 31, 2024, Kiwibank's impaired assets were at $39 million, up from $5 million a year earlier. Loans past due but not impaired were at $338 million, up from $290 million. The bank's impairment provision rose to $132 million from $114 million a year earlier.

In the six months from June to December 2024, deposits grew $1.8 billion lifting Kiwibank's deposit book 6% to almost $30 billion, with growth 1.6 times faster than overall market, or system, growth. 

"Both home and business lending grew faster than the market and deposits increased over the period. This growth underscores our commitment to driving competition that benefits everyday Kiwi and contributing to a productive economy by helping businesses to thrive," CEO Steve Jurkovich said.

"To support our faster than market growth we made significant investments in products, services, and technology to enhance the experience for our customers. This included our transformation programme, which is delivering more scalable and modern systems and ways of working, ultimately driving competition and growth."

"Another area of substantial investment was the proactive measures Kiwibank took to protect customers as part of our ongoing commitment to enhance fraud prevention capabilities. Key initiatives included expanding and developing our specialist fraud team, who are dedicated to improving the detection and prevention of fraud attempts," said Jurkovich.

"Additionally, Kiwibank became one of the first banks in New Zealand to roll out the Confirmation of Payee service."

"Looking ahead, we expect retail and business confidence to begin to return as factors such as lower interest rates provide relief and stimulus," Jurkovich said.

As of December 31, 2024, Kiwibank's total regulatory capital stood at $3.363 billion, up from $2.885 billion a year earlier.

Investment sought

Late last year Finance Minister Nicola Willis said Kiwibank had been asked to raise up to $500 million from local institutional investors in a private capital raise. This is intended as the first step to boosting the bank's capital for ongoing growth ahead of a possible share market listing in 2028. 

Scaling up Kiwibank was one of the key recommendations in the Commerce Commission’s banking market study, published in August 2024, which found the banking sector lacked competition.

Sourced from Kiwibank’s Disclosure Statements and management information.
GLA: Gross Loans and Advances
1 System figures are based on Reserve Bank statistical series S50: registered banks total loans as at 31 December 2024. Figures exclude credit impairment provision on undrawn commitments.

Kiwibank's full press release is here, and Kiwibank's presentation is here.